Landicho vs. GSIS [G.R. No.

L-28866 March 17, 1972] FACTS: On June 1, 1964, the GSIS issued in favor of FlavianoL a n d i c h o , a c i v i l e n g i n e e r o f t h e B u r e a u o f P u b l i c Works, stationed at Mamburao, Mindoro Occidental,optional additional life insurance policy No. OG-136107in the sum of P7,900. xxx EH 403 INSURANCE LAW CASE DIGESTS Before the issuance of said policy, Landicho had filedan application, by filing and signing a printed form of the GSIS on the basis of which the policy was issued.Paragraph 7 of said application States:7. xxx I hereby agree as follows: xxxc . T h a t t h i s a p p l i c a t i o n s e r v e s a s a l e t t e r o f a u t h o r i t y t o t h e C o l l e c t i n g Officer of our Office thru the GSIS tod e d u c t f r o m m y s a l a r y t h e m o n t h l y p r e m i u m i n t h e a m o u n t o f P 3 3 . 3 6 , b e g i n n i n g t h e m o n t h o f M a y , 1 9 6 4 , and every month thereafter until noticeo f i t s d i s c o n t i n u a n c e s h a l l h a v e beenreceived from the System; .d. That the failure to deduct from mysalary the month premiums shall notm a k e t h e p o l i c y l a p s e , h o w e v e r , t h e premium account shall be consideredas indebtedness which, I bind myself topay the System; .e . T h a t m y p o l i c y s h a l l b e m a d e effective on the first day of the monthn e x t f o l l o w i n g t h e m o n t h t h e f i r s t p r e m i u m i s p a i d ; p r o v i d e d , t h a t i t i s not more ninety (90) days before ora f t e r t h e d a t e o f t h e m e d i c a l e x a m i n a t i o n , w a s c o n d u c t e d i f required."While still an employee of the Bureau of Public Works,M r . L a n d i c h o d i e d i n a n a i r p l a n e c r a s h o n J u n e 2 9 , 1966. Mrs. Landicho, in her own behalf and that of herco-plaintiffs and minor children, Rafael J. and MariaL o u r d e s E u g e n i a , f i l e d w i t h t h e G S I S a c l a i m f o r P15,800, as the double indemnity due under policy No.OG-136107. GSIS denied the claim, upon the groundt h a t t h e p o l i c y h a d n e v e r b e e n i n f o r c e b e c a u s e , p u r s u a n t t o s u b d i v i s i o n ( e ) o f t h e a b o v e - q u o t e d paragraph 7 of the application, the policy "shall be ...effective on the first day of the month next following the month the first premium is paid," and no premiumhad ever been paid on said policy. The Lower Court decided in favor of the petitioner. GSIS appealed to theSupreme Court. ISSUE: WON the insurance policy in question has ever been inforce, not a single premium having been paid thereon. RULING: Lower Court decision is sustained.(T)he language, of subdivisions (c), (d) and (e) is sucha s t o c r e a t e a n a m b i g u i t y t h a t s h o u l d b e r e s o l v e d against the party responsible ther efor defendantGSIS, as the party who prepared and furnished theapplication form and in favor of the party misled thereby, the insured employee.Indeed, our Civil Code provides:The interpretation of obscure words orstipulations in a contract shall not favorthe party who caused the obscurity. 2 This is particularly true as regards insurance policies,in respect of which it is settled that the " "terms in aninsurance policy, which are ambiguous, equivocal, oruncertain ... a r e t o b e c o n s t r u e d s t r i c t l y a n d m o s t strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially wherea forfeiture is involved" (29 Am. Jur., 181), and the reason for this rule is the "insured usually has no voicein the selection or arrangement of the words employedand that the language of the contract is selected withg r e a t c a r e a n d d e l i b e r a t i o n b y e x p e r t s a n d l e g a l advisers employed by, and acting exclusively in theinterest of, the insurance company." (44 C.J.S., p.1174.) 3

.The equitable and ethical considerations justifying theforegoing view are bolstered up by two (2) factors,namely:(a) The aforementioned subdivision (c) states "thatthis application serves as a letter of authority to the Collecting Officer of our Office" the Bureau of PublicWorks " thru the GSIS to deduct from my salary themonthly premium in the amount of P33.36." No suchdeduction was made and, consequently, not even t h e f i r s t p r e m i u m " p a i d " b e c a u s e t h e c o l l e c t i n g officer of the Bureau of Public Works was not advisedby the GSIS to make it (the deduction) pursuant to said authority. Surely, this omission of the GSIS shouldnot inure to its benefit. .(b) T h e G S I S h a d i m p l i e d l y i n d u c e d t h e i n s u r e d t o believe that Policy No . OG-136107 was in force, h e h a v i n g b e e n p a i d b y t h e G S I S t h e d i v i d e n d s corresponding to said policy . Had the insured had thes l i g h t e s t i n k l i n g t h a t t h e l a t t e r w a s n o t , a s y e t , effective for non-payment of the first premium, hewould have, in all probability, caused the same to beforthwith satisfied.WHEREFORE, the decision appealed from should be, itis hereby affirmed, with costs against the defendant-appellant, Government Service Insurance System. It isso ordered. .